When and if he is finally sworn in as Nigeria’s next President, Mr. Bola Ahmed Tinubu, the ruling All Progressives Congress (`C) candidate who was declared the victor by the Independent National Electoral Commission (INEC), will have his job cut out for him . This becomes particularly clear with regard to the restructuring of the Nigerian economy. The new president would need to focus on a number of critical issues if the economy were to receive a boost during his tenure. It is now well known that the economic situation under Muhammadu Buhari’s government worsened than it was in 2015, when he took office.
This includes virtually all economic indicators, namely poverty incidence, exchange rate, inflation level, gross domestic product (GDP) growth rate, debt burden, fiscal sustainability and indeed the overall standard of living of the average Nigerian. In fact, the Buhari government’s economic record was very poor. The new President must avoid the path of the outgoing government. It must put in place programs and structures to turn the tide and guarantee a future for the bulging young population who seem hopeless in the current scheme of things
First, the new president must assemble a world-class economic team similar to those of the Obasanjo and Goodluck Jonathan governments, which have tasked veteran technocrats like Ngozi Okonjo-Iweala, Akinwunmi Adesina and others with solid pedigree as well as global credibility to run Nigeria’s economy . All views to the contrary notwithstanding, it is clear that the Nigerian economy experienced tremendous growth during these periods. Credible members of professional organizations such as the Nigerian Economic Society and others should be brought on board to lead the way for the Nigerian economy. The economics team will help ensure that there is harmonization of fiscal and monetary policies and that the economy is made productive in the pursuit of sustainable growth. Currently, the economy is largely based on consumption and the search for pensions.
Second, the new government should face up to the challenge of fiscal sustainability that the Nigerian economy is going through. This is at the heart of the current economic problem. The Buhari government inherited an average annual budget of about N4.5 trillion in 2015, but has successively increased this to over N20 trillion in 2023. Not much was seen in the growth of Nigeria’s economy to justify this increase. What has become very evident is the rise in the country’s public debt burden from around N12.5 trillion in 2015 to over N48 trillion judging by the latest figures from the country’s Debt Management Office (DMO). This does not take into account the 2022 budget deficits as well as the advance of over N 20 trillion Ways and Means from the Central Bank of Nigeria (CBN).
The new president must openly address the sovereign debt issue. It’s so devastating that the debt service payment even exceeds revenue, prompting the country to borrow more and more. This may require the need to seek debt restructuring of the entire debt portfolio and adopt a more pragmatic debt management strategy where borrowing is strictly tied to projects that can repay the loan themselves. The spending side also needs to be addressed, and this is an area where the incoming president would need to engage the other arms of government to ensure there is a drastic reduction in administrative costs. That is very critical. Revenue management is also important. Serious spills like the seemingly never-ending oil theft need to be addressed. It is sad and embarrassing that Nigeria was unable to meet its OPEC quota and thus did not benefit to the maximum from the Russia-Ukraine war, which has further boosted the revenue inflow of many oil-exporting countries due to the relatively high price of crude oil in the international oil market. Tax revenues should be increased as much as possible by including the informal sector in the tax net. However, multiple taxation must be avoided as far as possible.
Third, the issue of fuel subsidies should be approached head first. This will have serious implications for improving the country’s fiscal sustainability and will be in line with the provisions of the Petroleum Industry Act, which allows deregulation of activities in the oil and gas industry. Despite the public outcry that might follow this move, the government should not back down but instead act accordingly, despite the need to provide the necessary palliatives to cushion the policy’s likely inflationary impact. This problem needs to be addressed.
Next, the need to address the poverty problem in Nigeria is very important. Many Nigerians have lost hope in the Nigerian economy’s ability to provide their livelihood and means of survival. As a result, many people, especially young people, are leaving the country in droves. Since the inauguration of the Buhari government in 2015, virtually everyone in Nigeria has become poorer. Inflation has risen dramatically from single digits in 2015 to around 22% in 2023. Real wages have fallen. The exchange rate has depreciated from around N197 to one US dollar in 2015 to currently N750. All of this has fueled inflation. Poor infrastructure, insecurity and low levels of public energy, which have driven up costs, have hampered production and fueled inflation. All of this needs to be addressed to make life worth living for the average Nigerian.
Finally, the new government should adopt a balanced development strategy, seeking to open up the country and encourage the decentralization of economic activities away from the already congested parts of the country. Lagos, for example, is becoming increasingly populated with the regular influx of Nigerians from other regions. The resulting pressure against the limited infrastructure makes life difficult; There is a great need to develop further economic centers throughout the country. One of the ways to do this is to expand operations at the ports of Warri and Port Harcourt, and consequently divert cargo there, to relieve Lagos and encourage hinterland development. That doesn’t stop Lagos from being the country’s economic capital, but it will stem the tide of continuous influx of people to Lagos in search of economic opportunities. This should be addressed if the new government plans to improve economic inclusion in the geopolitical zones. Adopting a balanced development approach would also include the development of sustainable infrastructure in these regions.
Presidential elections have come and gone, and what is required now is governance; good governance indeed. Although the task is Herculean, the new President must hit the ground running. By and large, people are looking for good governance. Many will largely forget their grievances about the outcome of the elections or their prejudices against the `C or the President-elect as they experience improved living standards and national cohesion under the new government.
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